ERISA Claim Or Not?

The above question is always being asked by insurance lawyers when someone sees them about an insurance claim. Whether a claim is covered by ERISA or not, makes a huge difference in how the claim is handled. A little insight into whether a claim is an ERISA claim or not is gleamed from a 2015, Fifth Circuit case. It is styled, Kelsey-Seybold Medical Group PA v. Great-West Healthcare of Texas, Incorporated.
Kelsey sued Great-West in Texas state court, alleging that Great-West had not paid the contractually required rate for medical services that Kelsey had provided to members of Great-West-affiliated healthcare plans. Great-West removed the case to federal court on the ground that Kelsey’s claims were completely preempted by ERISA. Kelsey moved to remand on the basis that its claims were not completely preempted and, therefore, the district court lacked subject matter jurisdiction. The district court declared the claims preempted and entered a take-nothing judgment in favor of Great-West. To determine whether a claim is completely preempted by ERISA, the Court applies the two-part test set forth in the case Aetna Health Inc. v. Davila: a claim is completely preempted if
(1) the claimant “could have brought his claim under ERISA ยง 502(a)(1)(B),” and
(2) “there is no other independent legal duty that is implicated by a defendant’s actions.” In that case the Court held that “a claim that implicates the rate of payment as set out in the Provider Agreement, rather than the right to payment under the terms of the benefit plan, does not run afoul of Davila and is not preempted by ERISA.” This is because a dispute concerning only the contractual rate of payment is a breach-of-contract claim, not an ERISA claim. Thus, where a “partial payment . . . resulted from a denial of benefits under the plan, the claim may be preempted,” but “where claims do not involve coverage determinations, but have already been deemed ‘payable,’ and the only remaining issue is whether they were paid at the proper contractual rate, ERISA preemption does not apply.”
Great-West bears the burden of showing that removal was proper and establishing federal jurisdiction. Great-West has not satisfied its burden, as it has not identified any claims that “implicate coverage determinations under the terms of the relevant plan.” Great-West contends that “about 98% of Kelsey’s claims are claims for ERISA plan benefits,” but that fact is irrelevant; the question is not whether plaintiff’s claims relate to benefits under ERISA plans, but rather whether adjudication of those claims requires an interpretation of an ERISA plan. Great-West has not shown that any of Kelsey’s claims concern “the right to payment under the terms of the benefit plan,” as opposed to “the rate of payment as set out” in the parties’ contractual agreement. Thus, Great-West has not satisfied its burden to establish federal jurisdiction. This Court reversed the judgment of the district court and remanded, with instructions for the district court to remand the case to state court.

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